Tuesday, 25 November 2014

TweetI’ve been a bit
uneasy from the outset about Osborne’s decision to give people more freedom
about how they should use their pension pots.On the one hand, it’s difficult to argue with the idea that people
should have more freedom about the ways in which they use their own money.But on the other, those accumulating large pension
pots have done so partly on the basis of preferential tax treatment of the
money salted away.That preferential
treatment was given on the basis that people were prudently saving for
retirement, and would never have been granted to anyone who said they were simply
saving for a Ferrari.

Part of my
unease is about people taking the ‘wrong’ decisions about how to use their
pension pots; but neither am I convinced that the state always knows best when
it comes to people making decisions about their own retirement.Governments don’t exactly have an unblemished
track record when it comes to taking decisions for us.

My unease was
increased recently as the result of a marketing mail shot which I received from
a financial services company.Other than
the fact that my age puts me in the right demographic, they’ve clearly done no
research or pre-qualification whatsoever before telling me how they can help me
access tax free sums from my pension without even having retired.The company concerned would, of course, help
themselves to 5% of the sum released, and, apparently, an annual fee for
reviewing the pension.(Although that’s
only found in the small print at the bottom of the last of 4 pages of blurb.And they don’t tell me anywhere that actually
I could do exactly the same without any help from them, and keep my 5% to
boot.)

It may, as I’m
sure that the government would argue, be invalid for us to stop people doing as
they wish with their own money just because it might not be their most sensible
decision.The right to take decisions
must always include the right to take silly ones.But surely it is an entirely proper political
concern to ask whether financial services companies are pushing people in a particular
direction in order to take an unnecessary slice off savings which people have
taken decades to accumulate?

It may be that
Osborne’s intention from the outset was to benefit his friends in the financial
services industry.Some of them
certainly lobbied hard for the decision he took.But even if we give him the benefit of the
doubt on that, and assume that his aim really was to give those with a big
enough pension pot to make it worthwhile more freedom on how they use it, he
has potentially opened the door to yet another mis-selling scandal, as
companies keen to make profits target a wider and wider potential market.How many people will have lost out before
action is taken?